China Home Prices Post First Gain in 10 Months, SouFun Says

July 2 (Bloomberg) -- China’s new home prices rose for the
first time in 10 months as the government eased its monetary
policies to bolster the economy, according to SouFun Holdings
Ltd., the nation’s biggest real estate website owner.

Home prices increased 0.1 percent from May to 8,688 yuan
($1,367) per square meter (10.76 square feet), SouFun said in an
e-mailed statement today, based on its survey of 100 cities.
Beijing led gains among the nation’s 10 biggest cities, climbing
2.3 percent from May, followed by the southern business hub of
Shenzhen, which added 0.8 percent.

China’s Vice Premier Li Keqiang asked for curbs on
speculative home demand to be continued and called for more
efforts to build affordable housing units, Xinhua News Agency
reported yesterday. While the government maintained its housing
curbs, it helped ease funding by lenders and vowed to support
first-home buyers. The central bank cut the benchmark one-year
lending rate last month for the first time since 2008.

“The rate cut played a big role changing the sentiment on
the market,” said Jeffrey Gao, a Shanghai-based property
analyst for Macquarie Capital Securities. “The government
hasn’t changed the overall direction of the property policy, but
it probably will be less stringent on the easing in smaller
cities.”

A gauge tracking property shares on the Shanghai Composite
Index climbed 0.5 percent at the close, the highest in more than
a week. The benchmark measure gained less than 0.1 percent.

First-Time Buyers

Lenders in Beijing gave first-home buyers mortgages at a 15
percent discount to the 6.8 percent benchmark rate after the
central bank reduced borrowing costs, said Wu Hao, a manager at
the loan brokerage of Bacic & 5i5j Group, the capital’s second-biggest real estate broker. In the second half of 2011, they
paid 5 percent to 10 percent more than the benchmark, she said.

Buying sentiment has gradually increased after the monetary
policy easing this year, SouFun said in today’s statement. Some
developers have called off discounts or even raised prices after
sales picked up, it said.

China’s home sales rebounded for the first time this year
in May, rising 19 percent to 375.7 billion yuan from the
previous month, according to the statistics bureau. Evergrande
Real Estate Group Ltd., the country’s biggest developer by sales
volume, posted a 33 percent rise in sales to a record 10.4
billion yuan in May from a year earlier.

China’s home prices will remain unchanged from 2011 by the
end of the year, and rebound by the second quarter of next year,
according to Gao.